Does Anyone Really Know How Much
is in the Chicago Police Pension Fund?
IPSN July 16, 1997
SOME WEEKS AGO, the Illinois Police and Sheriffs News carried an article on the rather shaky long-term financial position of the Chicago Police Pension Fund. In that piece, we reported that Ken Hauser claimed in his column in the Fraternal Order of Police Newsletter that the Fund had nearly three trillion dollars in it and had earned $300 million profit on investments the previous year.
Hauser, who is elected to sit on the Fund Board by rank-and-file police, also claimed that the Chicago Police Pension Fund was currently operating at a funding level of 70 percent of anticipated liabilities.
AMONG the figures that we took issue with are these: First, there is absolutely, positively, no way that the Chicago Police Pension Fund could have anywhere near three trillion dollars in it. The most charitable explanation we can come up is that Ken Hauser, author of the column that appeared in the FOP (Friends Of Politicians) Newsletter, does not know how to express large amounts of money in print and simply made a mistake.
Second, even if Hauser is correct in his claim that the Pension Fund is operating at a level of 70 percent of anticipated liabilities, is that anything to brag about? Is there any working cop in his or her right mind who would walk into their bank, be told that their savings account has seventy cents on the dollar in it, and find that fact something to brag about?
Additionally, Hauser is contradicted on that point by no less an authority than City Treasurer Miriam Santos, who says the true funding level of the Chicago Police Pension Fund is really right at 60 percent. Then, if we take the same numbers to State of Illinois actuarial experts, we find the accounting system used throughout the State would peg the Police Fund at 51 percent of anticipated liabilities.
ON THAT LAST POINT, a former member of the Police Pension Fund Board, who asked not to be identified, adamantly claims that the State figure of 51 percent funding is closest to real number. If hes correct, that means the Chicago Police Pension Fund, which has assets valued at right around $2.75 billion, really needs well over $5 billion to be anywhere near solvent.
And, because a huge percentage of Pension Fund assets are tied up in the stock market, every time the Dow-Jones sneezes, the Police Pension Fund gets pneumonia.
And finally, the third Hauser point that we took issue with was the claim that the Pension Fund earned $300 million on its investments last year. Its certainly possible, but who really knows? If Hauser is unable or unwilling to accurately state the true value of the Pension Fund in print, and if he claims that 70 percent funding is actually somehow good for those people who usually count 100 cents to the dollar, can he be taken seriously when he claims the Fund earned $300 million last year?
ALSO, WE HAVE several other key questions about the Chicago Police Pension Fund: For instance, should Walter Knorr, City Comptroller and Chief Financial Officer for the City of Chicago, also hold a key decision-making position on the Police Pension Fund? As a man who owes his allegiance (not to mention his paychecks) to Mayor Richard Daley, can Knorr really be counted on to act in the best interest of retired police and their families.
It was less than two months ago that the Daley Administration floated a plan to use Pension Fund money to buy new computers, repair sidewalks and cover a couple of other big-ticket expenses with all those nine percent contributions that working cops routinely make to the Pension Fund. Although that plan was shelved (at least temporarily), due largely to the public outcry of CCPA President John J. Flood and a couple of other Fund observers, the fact is Walter Knorr did not make any noticeable effort to stop the sidewalks and computers plan.
KNORR, to no ones surprise, did not respond to a request for an interview with the Illinois Police and Sheriffs News.
FROM WHERE WE sit, the Chicago Police Pension Fund has lots of problems, not the least of which is the built-in, never-ending problem of political cronyism. If Walter Knorr works for the Mayor, can he ever be expected to truly represent either active police or pensioners?
Similarly, whenever Ken Hauser sticks his finger up in the air to see which way the political winds are blowing, will his first interest be with FOP President Bill Nolan or with the retirees?
AND, THERES the question of simple math. If a working cop puts nine percent of his or her salary into a fundany fundover a 20 year or so period, he might be expected to contribute something like $90,000 to perhaps $120,000 during that time. And, if that fund were to pay as little as, say five percent interest compounded annually, the typical working cop would end up with a cash nest egg of something in the area of $500,000.
So, the question is, does any working cop whos out on the front lines today ever expect to see a half-million dollars from any fund that FOP guys like Ken Hauser or Bill Nolan play with? Especially since neither Hauser or Nolan seem to know the difference between a billion, a trillion or any other number that has more than one or two zeros in it?
Also, can any working cop really believe that his or her half-million will be there after guys like Richie and Walter get through buying sidewalks and computers?
WE AT CCPA do not claim to have all the Pension Fund answers. But we do at least know what questions to ask.
AND, ONE QUESTION were hearing more and more Chicago police ask these days is this: How do we get rid of the FOPthe Friends Of Politiciansand bring in a union thats serious about making things happen for its members.
THE ANSWER is easy. Call CCPA (847) 202-3838. Ask for Joe Longmeyer.
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